Hydrodec, CEP Ink UK Rerefinery Deal


Hydrodec signed engineering, licensing and technology collaboration agreements with Chemical Engineering Partners for a planned U.K. rerefinery capable of producing API Group II/II+ base oil, potentially by 2016.

Announced Aug. 1, the agreements would provide Hydrodec with an exclusive U.K. license to develop Irvine, Calif.-based CEPs wiped-film evaporation and hydrogenation technology, as well as the basic engineering for a 75 million liter per year lubricant rerefinery. Hydrodec operates transformer oil rerefineries in Canton, Ohio, and in Young, Australia.

The project is separate from Hydrodecs previous arrangements with Essar Oil UK. Hydrodec announced plans in November 2013 to collaborate with Essar Oil UK on a joint venture oil rerefining center at Stanlow, United Kingdom, including a pilot plant focused on rerefining used paraffinic base stocks and later a rerefinery with API Group II+ and III base oil capacity, also by 2016.

Hydrodec is pursuing the CEP-enabled rerefinery project independently and at a separate, advantaged location on which it is developing an option for lease and development, according to its news release. The company plans to initiate a basic engineering design and begin a consultation process for planning permission. Assuming both provide positive assurance on a viable business plan, we will create a lubricant oil rerefining project by the fourth quarter of this year, with the potential for a full-scale rerefinery which will be operational during 2016, Hydrodec stated.

Hydrodec expects opportunities to arise to collaborate with CEP on other projects, by incorporating Hydrodecs provisionally patented pre-treatment and hydrogenation technology within the CEP technology platform. The intent is to improve oil recovery and rerefined base oil quality, and to use these technologies in combination to develop additional facilities in the U.K. and elsewhere, Hydrodec stated, adding that the two companies would work together to take advantage of future opportunities in the U.K. and potentially in international markets.

CEP President Joshua Park explained to Lube Report that Hydrodec believes some developments from its existing technology may be compatible with CEPs technology, and potentially make a very significant improvement to the used oil rerefining technology. If that is the case, CEP was very happy to work with them to actually implement that into our technology and maybe cross-license in the future – thats what the collaboration effort is about. It is not to tweak our process or make a little change here and there.

Park said it was unlikely the companies would make changes to CEPs process during the first couple years of the collaboration. Once they feel comfortable with our process, then basically were going to work together to see if theres anything [Hydrodec] can implement of what they currently have from their technology and make our process overall significantly better than what is now, Park said. If that is the case and we can achieve that, it will be a great opportunity for both parties and the rest of the rerefining industry also.

According to Park, 10 rerefineries currently in operation use CEPs technology. Two other planned rerefineries – a VN Oil project in Vietnam scheduled for startup in April 2015, and Alabama Green Lubricants project in Alabama, expected to start up in mid-2015 – will also use CEPs technology.

Hydrodec said it anticipates the collaboration with CEP will accelerate Hydrodecs plans to enter the lubricant rerefining market in the United Kingdom while also reducing its technology risk.

CEPs leading technology can produce API Group II/II+ quality base oil from collected used lubricant oil feedstock with base oil recoveries in excess of 70 percent; byproducts include bitumen and light-end hydrocarbon residues, which can be sold for blending, Hydrodec stated. Hydrodec proprietary technology is specifically targeted at adding value by increasing base oil recoveries to 85 percent plus, as well as improving base oil quality to higher margin Group II+/III suitable for specialist high quality lubricant manufacture.

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